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How Outsourcing with a P3 Project Makes Good Business Sense

What is outsourcing?

Outsourcing is simply using contractors to do things traditionally done by in-house staff.

In the P3 space, virtually the entire project is outsourced, by definition. In a traditional, publicly owned and operated roadway, the Owner (DOT/Ministry, etc.) provides operations and maintenance for the roadway with in-house staff, trucks, equipment and materials. Similarly, a facility such as a hospital, manufacturing facility, port or other large fixed asset will have maintenance staff and operational support.

What are the benefits?

In a word, “Efficiency.” But how? For one, you get more efficient use of your people resources.

Good workers generally want to do a good job – finish it properly and move to the next task. Contractors and mechanics know this. If they have a lump-sum price to replace your HVAC system, they will get it done quickly and efficiently and move on to the next job. If you pay all of your subs a T&M rate, you won’t get this benefit. If all your maintenance personnel are hourly in-house staff, you are essentially paying them a T&M rate. They are not motivated to get the job done faster.

What’s so special about specialists?

With today’s technology and ever advancing and inter-related systems, it is much more difficult to hire, train and keep a “jack-of-all-trades” maintenance staff on hand. It is more efficient, safer, faster and cheaper to utilize a team of highly trained, on-call specialists. With new technologies on the horizon, you may not even need to “fly in” the technician.

Get better use of your equipment resources

  • Don’t let it sit idle: If the machine sits in the yard most of the time, you don’t need to own it. Maybe it seemed to make sense when you bought it, but you are not in the business of amassing a fleet of equipment that sits most of the time. Instead, try subcontracting, renting or leasing it. Construction companies know this and have a fleet of lowboys working every night to get idle equipment to the site of a (paying) job.
  • Paid-for equipment is not free: Maybe that motor grader sitting on your property is paid for. But if it’s not being used, that’s a $150,000 pile of cash sitting in your yard that could get another thousand feet of ditch cleaned or 200 potholes filled. At a minimum, share it or make it available to another location.

Finally, we mention profit. The profit motive drives efficiency and productivity. Although it can be a dirty word sometimes, the profit motive – coupled with performance standards – will undeniably drive innovation and ultimately result in lower costs.

About PILLAR, Inc.
PILLAR is a multi-discipline firm focused on collecting, analyzing, and turning data into efficient and effective strategies for operating and maintaining roadways, bridges, tunnels, and other forms of infrastructure. We are a trusted partner that DOTs, municipalities, and P3 stakeholders rely on for expertise in safely managing roadway infrastructure in a fiscally sound and responsible manner.”

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PILLAR, INC. Part of Team Chosen for Canadian Roadway P3 Project

North Star Infrastructure Team to build and maintain Northwest Territories Tłı̨chǫ All Season Road

WYTHEVILLE, Va. (February 27, 2019) – PILLAR Operations and Maintenance Advisors worked with its client, North Star Infrastructure, on a project to design, build, finance, operate, and maintain the Northwest Territories Tłı̨chǫ All Season Road in Canada. Working closely with North Star staff as the technical advisor, Pillar contributed to the success of the winning bid by developing operations and maintenance (O&M) budgets for the 25-year concession.

Construction on the public private partnership (P3) project starts in the fall of 2019 and includes construction of a new 2-lane, 97-kilometer (60.27-mile) gravel, all-season road. The project will create an essential year-round connection from the community of Whatì to Highway 3, southwest of Behchokǫ, Canada. The project team will also handle routine maintenance as well as lifecycle and handback provisions.

About PILLAR, Inc.
PILLAR is a multi-discipline firm focused on collecting, analyzing, and turning data into efficient and effective strategies for operating and maintaining roadways, bridges, tunnels, and other forms of infrastructure. We are a trusted partner that DOTs, municipalities, and P3 stakeholders rely on for expertise in safely managing roadway infrastructure in a fiscally sound and responsible manner.

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The Case for Pavement Management

Why is pavement management important?

The nation’s road system represents an asset valued at more than $2.4 trillion. Nearly 90% of passenger-miles traveled and 60% of the nations’ total freight is transported via the nation’s highway system. There is no doubt, it is an asset worthy of substantial investment for the sake of our economy and the safety of our citizens.

Two constant elements unrelentingly diminish pavement’s value and cost the nation billions of dollars every year: traffic loads and environmental conditions.

The budgets allocated for the construction, repair and ongoing maintenance of pavement grow increasingly tighter. As a result, it has become obvious that relying solely on traditional experience-based maintenance and repair (M&R) techniques is not sufficient. We have the tools and knowledge to proactively manage the maintenance of our nation’s highways, taking into consideration a number of factors such as life cycle cost analysis, timing of projects, prioritization and optimization, as well as the prediction of pavement performance. This modern approach to the pavement management process takes all these factors into consideration to develop a proactive, cost-efficient approach to protecting and preserving the valuable asset our national highway systems represents.

In his wonderfully informative and helpful book, “Pavement Management for Airports, Roads, and Parking Lots,” M.Y. Shahin describes pavement management as “systematic, consistent method for selecting M & R needs and determining priorities and the optimal time of repair by predicting future pavement condition.”

The importance of maintenance timing is illustrated nicely in the following figure from the book:

pavement management graph

The figure clearly shows that conducting M &R before the sharp deterioration of the asset results in significant savings on repair costs. These financial savings are in addition to avoiding long roadway closures, detours and traffic delays.

The pavement management process consists of the following steps (each of which will be discussed further in another Pillar Talk column):

  1. Pavement inventory
  2. Pavement inspection and assessment
  3. Pavement condition prediction and analysis

Every dollar spent on thoroughfares is an investment in the economy and public good. Indeed, pavement management is a valuable tool in ensuring taxpayers that their investment (tax dollars) are providing them with a safe, accessible, sustainable, and long-lasting network of roadways.

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What does Rehabilitation mean for a Public-Private Partnership?

A Public-Private Partnership (P3) is a contract vehicle where a private developer – working with a public entity – designs, builds, finances and operates the infrastructure. This Pillar Talk will focus on the rehabilitation, or handback portion, of a P3.

P3 transportation projects have two varieties: availability payment or revenue risk.

In an availability payment model, the public entity pays a fixed amount on a monthly or annual basis, usually after making some larger “milestone” payments during or at completion of construction. The funding could come from general transportation funds, a bond issue or indirectly from tolls generated from the new roadway but retained by the public entity or any combination of these. An availability payment P3 is generally of shorter duration, generally 25 years.

A revenue risk project is funded directly by toll revenue generated by the facility. The developer takes on much more risk and is not guaranteed any level of funding from the public. Unless the public entity “buys down” the tolls by injecting cash, there is generally no “milestone” payments during or after construction. Due to these risks and funding variables, the revenue risk project duration is usually much longer: Often 50 years but it could be up to 75 years or longer.

Once the project is complete, it is turned over to the public entity. To ensure the public entity receives an asset in good condition, certain “handback” requirements must be met. The rehabilitation process is the manner in which the developer meets these requirements. The requirements are usually limited to major assets, such as pavements and structures.

Handback requirements generally require an asset be in a certain condition or have a set number of years of remaining service life on handover. For example, pavements could be required to have a maximum IRI or have structural capacity requiring no more than a 2” overlay within 10 years. Bridge structures may have to meet an NBIS rating of “7” or better.

Other items such as sign structures or high mast light structures may require 15 years of remaining service life. A high mast light structure may have a design life of 40 years. On a 25-year project, it would not need to be replaced. On a 50-year project, it would likely be replaced in year 40.

Longer projects tend to have lower handback requirements – this allows the project to be more affordable as it will likely be too expensive to expect a “brand-new road” be given back to the public at the end of the term.

To ensure the asset is in acceptable condition, a series of inspections will occur over the last five years of the project. The inspections would be made by an acceptable third-party engineer, with reports and recommendations made as to what the remaining service life is projected to be at project end. Some projects will have an escrow account where the developer sets aside money to guarantee funds will be available to complete the rehabilitation, with any remaining funds at handback kept by the developer.

Pillar, Inc. can help developers and owners understand the potential costs of handback requirements and can assist with bid-level budgets that ensure a quality asset is returned to the public. For more information, call 276.223.0500 or contact us online.

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Is Your Agency Maximizing Asset Management to its Fullest?

Last month I attended the 12th TRB Asset Management Conference (my third) and the 2018 AASHTO Committee On Maintenance Annual Meeting (my fifth).

While both conferences were about Asset Management, the focus of each was on two different planes. The TRB Conference focused more on strategic issues (i.e. risk, resiliency, sustainability) and the AASHTO Conference focused more on tactical issues (i.e. equipment, materials, technology, regulations). Asset Management has gone through a significant evolution from a tactical focus on operations and roadside maintenance to a powerful strategic management tool that enables agencies to better plan, manage and execute to maximize results and be more cost efficient.

The Evolution of Asset Management

In its infancy, Asset Management was more tactical, defined by how an agency’s operations and maintenance (O&M) staff managed the maintenance and upgrading of its physical roadside assets.
Over time, Asset Management has become more strategic – utilizing business and engineering practices and processes strategically and systematically to operate, maintain, and upgrade all assets by maximizing resource allocations. Ideally, this is conducted through decisions based on quality information and well-defined objectives throughout the agency.

Knowing How to Maximize Results

The maturation of Asset Management – along with other factors such as aging infrastructure, decreased budgets, higher accountability, and workforce attrition – has resulted in a fundamental shift in operations.
Agencies need to know and examine what they have (collect and condition assess assets) and what they can do with their money, people, equipment, and contracts (analyze and prioritize) to create a plan which maximizes results and comes closer to achieving their objectives.

Importance of Strategic Planning

No longer is Asset Management defined as O&M field personnel managing roadside items, but as a business practice for an agency to manage its entire asset collection (people, materials, equipment, and contracts).

Subsequently, strategic planning at a higher organizational level is becoming the more dominant and prominent feature of Asset Management. If not managed properly, this can cause a gap within an agency between the planners (office) and operators (field) placing each on different planes.

PILLAR Bridges the Planner-Operator Gap

Planners rely on the field data to model and develop the objectives. O&M field personnel rely on the same data to review, manage, locate, and execute the work to meet objectives. Therefore, Asset Management and Maintenance Operations are interconnected through quality field data. Planners and operators need to work with and understand each other and how to use the data to become coplanar. One cannot be subservient to the other.

This is where PILLAR can help. Our staff of professionals have been involved with Asset Management from its infancy and with Maintenance Operations for many decades. We understand the pitfalls and challenges faced by agencies developing and implementing their asset management plans.

PILLAR can and has helped gather the data utilized in developing and executing well-defined objectives. We collect, assess, analyze, and prioritize data through a variety of means and methods – enabling agencies to transition and mature with their Asset Management program.

We bridge the gap between planners and operators by combining our engineering background with our practical field experience. This translation not only advances but also strengthens an agency’s interconnection between planners and operators.

Contact us to discuss how we can strengthen your agency.

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Top 10 safety rules for the end of summer

John Meola, PILLAR’s Safety Director, penned an article for the Richmond Times-Dispatch discussing safety rules motorist should be aware of as summer comes to an end. 

Read the full article here.

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Mobile LiDAR’s fully automatic asset extraction capability sets it apart

Modern technology has catapulted the maintenance of roadway infrastructure to a new level.

When it comes to collecting data about your assets, PILLAR utilizes the Leica Pegasus: Two Ultimate as its choice for mobile LiDAR. The laser scanning and mapping technology platform provides what we need to get the job done.

This device utilizes two back-to-back cameras to create 360-degree images from a vehicle, boat, 4-wheeler or train. A removable SSD means you have the information at your fingertips when you walk into the office.

Fully automatic feature extraction

Semi-automatic feature extraction is good. Fully automatic feature extraction is the best, quickest, and most helpful. It allows you to get started on projects as soon as possible.

Using our full automatic feature extraction program, we can extract assets and their quantities quickly and accurately. If saving time appeals to you, contact us to see how much time we could cut out of your project and add back into production.

More than 20 assets can be extracted into your own geospatial information system. This comprehensive transportation infrastructure management application includes:

  • Signs
  • Guardrails
  • Bridge Clearances
  • Trees
  • Ditches
  • Overhead Utilities
  • And More

Collection and Execution

The information collected provides the most detailed data possible on your assets, helping you determine what you have and where it is located. This information can then be used to identify which work needs to be given the highest priority, helping you work within your budget.

InfraTrak is a GIS system asset management application agencies purchase as an additional tool to better manage assets. It is an iPad-based app with a GIS interface, able to overlay assets on aerial maps for an interactive set of field plans. InfraTrak is completely compatible with the most popular GIS software such as Esri’s ArcGIS software and many others.

For more information on PILLAR’s Asset Management Solutions, contact us or call 276.223.0500.

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Safety Should Not Take Days Off of Work

The safety measures a company puts in place tend to be taken for granted. That is until an accident occurs and the issue is brought to the forefront.

June is National Safety Month, an initiative led by the National Safety Council (NSC) to ensure “No One Gets Hurt.” The month aims to reduce the leading causes of injury and death at work, on the road and in homes and communities.

Each week of the month highlights a different aspect of safety: Week 1, emergency preparedness; Week 2, wellness; Week 3, falls; and Week 4, driving.

Prepare for the Unexpected

As news reports confirm, there are many types of emergencies we must be prepared to face in today’s workplace: active shooter situations, weather and natural disasters, terrorism incidents and medical emergencies, among others.

It’s critical for employees to be prepared to act according to your safety policies before, during and after such emergencies. Having plans in place and reviewing them with employees will help everyone get on the same page and minimize the risk of worst-case scenarios in an emergency.

Don’t Slip on Fall Prevention

Did you know that the third-leading cause of injury deaths is falls? According to the NSC, almost 32,000 people died from falls at home and work in 2014. In 2013, more than 47,000 workers were injured severely enough from falls that they required days off of work. Half of all fatal workplace falls were from 20 feet or lower, according to Injury Facts 2016®.

The good news is that falls are 100% preventable if proper safety procedures are implemented and followed. A couple of tips to keep in mind:

  • Ensure you and coworkers are properly trained on equipment.
  • Make certain stepladders have locking mechanism to hold front and back open.
  • At all times, keep either two hands and one foot or one hand and two feet on the ladder.
  • The ladder should be one foot from the surface it rests on for every four feet of height; it should also extend a minimum of three feet over the top edge.

Decrease Distracted Driving

The most proactively safe companies are going above and beyond state laws to ensure employees are not driving distracted on company time. Knowing you are four times more likely to crash when operating a cell phone, NSC maintains that any company serious about eliminating distracted driving accidents implement a cell phone ban on both hand-held and hands-free devices.

The NSC points to one Fortune 50 company with a simple phone-ban policy that covers all of the bases. It states that employees cannot use cell phones if an employee is doing any of the following:

  1. Driving a company car
  2. Operating a personal car on company business
  3. Driving on company property
  4. Using a company-supplied phone
  5. Using a personal phone for company business

Although June is designated as National Safety Month, it’s a reminder that safety procedures do not take vacations. Following safety protocol is of utmost importance to your business and its employees 24 hours a day, seven days a week and 365 days a year.

PILLAR’s safety team offers innovative and cost-effective solutions for your organization’s unique needs, including job-related safety meetings, distance learning opportunities, safety records management and on-site training.

For more information on PILLAR’s safety program, contact us online or call 276.223.0500.

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Top ten safety issues for contractors

After many years in the safety-consulting business, I have heard the loud chorus of employer complaints aimed at “Why do I need to do all this stuff?” To educate the contracting community, here is a brief summary of the Top 10 safety issues for contractors.

10) “No one told me I had to train these guys.”

Correct. You will not receive an engraved invitation from anyone on this topic. However, if you decide to open a construction business, you should be perceptive enough to understand, “There are rules in this game….”

Employer responsibilities for worker safety are actually fairly straightforward and relatively simple to meet. Visit the OSHA.gov page. There are simple tutorials available paid for by your tax dollars. You could also call a local personal-injury law firm. They’ll be glad to advise you.

9) “We are the best at what we do.”

Along with trade proficiency, your employees should also have matching safety skills depending on your line of work. Most large general contractors are increasing the contractor safety program admission criteria to bid their jobs. Just doing the job on time, on spec. and under budget is no longer enough. Proof of safety performance is necessary.

8) “Don’t blame us; we didn’t create that hazard!”

OSHA and VOSH (Virginia’s safety police department) have heard this excuse a lot. They actually have an answer for it called the Multi-Employer Worksite Policy. This doctrine basically holds all contractors on a site accountable if their employees were “exposed” to a hazard. You can be found at fault if you were just near the hazard. Your defense for this allegation is called due diligence and documented communication to the responsible parties about the hazard. In the meantime, if necessary, move your people well out of harm’s way.

7) “He’s my best guy, but he just won’t follow the safety rules.”

This statement is self-contradictory. For a tradesperson to be truly proficient, he or she will understand and adhere to applicable safety practices. You should be highly supportive of that. Your “best person” may need re-education or the exit door. Whether you realize it or not, you have a lot at risk from a rogue actor.

6) “Now my insurance company is pestering me about safety.”

Welcome to the new reality. The insurance company wrote coverage for your operation, therefore it expects you to play by the rules. Even the simplest of claims can turn ugly, so prevention is the preferred avenue of relief. Blatant non-compliance could result in revocation of coverage or big premium increases at renewal. Or you may end up in the assigned risk pool; in which case, you will regret not having done more of this safety stuff.

5) “There was nothing we could have done to prevent the accident.”

Even the most conservative appraisals classify preventable incidents in the high 90th percentile range. Most, if not all, incidents are preventable. Incident prevention is a matter of degree and commitment, but, at the end of the day, there is a simple list of must haves to gain admission. Trust me: With a little effort, you can avoid this stuff. Acts of God notwithstanding.

4) “The cost of doing all this safety stuff will put me out of business.”

When properly understood and applied, safety compliance is actually a small component of doing business. You are either in denial or misreading the safety rules. Yes, the rules can seem voluminous. Once understood, they’re actually not all that onerous.

3) “We have a good track record; we don’t need all this safety stuff.”

This is a commonly heard refrain in the safety business. The translation of this remark is, “We’ve just been lucky, that’s all.”

Reliance on your luck as a substitute for a safety program is ill-advised. Yes, most tradespersons will exercise a healthy degree of caution on the job without you lifting a management finger. But more complex work or even just driving around in the company truck deserves reciprocal attention for the risks involved. If you have employee driver fleet units, you should regularly be preaching defensive-driving practices.

2) “We are not worried about workplace violence; we got that covered.”

Not so fast. There is a lot of liability attached to the issue of workplace violence. A couple of simple maneuvers can help protect your organization and also help educate employees for prevention. We will most assuredly see a lot more emphasis on this in the near future from the authorities. Interestingly, there is currently no OSHA requirement to do anything for violence prevention. However, prudent management should step forward and define the policy and procedure.

1) “I thought all this red tape was going to be reduced.”

OSHA and the DOL may be temporarily underfunded, but the ABA and trial lawyers have the best lobbyists and wealthiest power grid on the planet. You might skate on compliance if your GC and client are sound asleep, but the legal community never rests. At least the safety police will treat you fairly depending on your transgression. Tort law and claim adjusters will be less kind.

Statistically, our population is most at risk from walking or driving to and from work as opposed to on the job. Workplace safety is ingrained into our societal DNA at this point, and regulatory compliance is largely taken for granted.

Business risk management, which includes occupational safety, has long been a monolithic field. That state of slumber is due for an awakening, and it is happening very quickly. We will examine these implications further in a future piece, but in the meantime, for additional reading, check out: www.doli.virginia.gov/vosh_enforcement/vosh_standards.html

This article was originally posted by the Richmond Times Dispatch

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Managers Manage Things, Leaders Lead People

Are you still using Occupational Safety and Health Administration (OSHA) metrics as your safety standard? Do you plan on being in this business 5, 10 or 20 years from now? If you answered yes to both, you have a value conflict. Why accept some random statistical average composed of questionable data as your standard when it is more effective to create personalized best practices and performance metrics?

PILLAR’s Safety Director, John Meola was recently published in Construction Business Owner magazine discussing 3 essential elements of a world-class safety program.

Read the full article here.